Material adverse change (MAC)

Definition

A clause letting a buyer walk if the business is badly damaged.

Also written material adverse change, MAC clause.

Why It Matters

It is the buyer's escape hatch when the business or the world turns badly between signing the purchase agreement and closing. How broadly it is drafted decides whether a lost key customer or a soft quarter actually lets you walk or renegotiate, so it is one of the clauses most worth lawyering rather than accepting as boilerplate.

In numbers: Between signing and close, a customer worth 30% of revenue gives notice. A MAC clause that names the loss of a major customer lets the buyer walk or reprice; a generic one may leave the buyer closing on a business that no longer exists as priced.